While it seems profitable in the beginning, one needs lot of efforts to make a franchise successful. The franchising consists of the business owner or franchisor putting out to a third party or franchise the right to operate a business or distribution of goods and services under the franchisor's brand name in return for fees. Therefore, let us know how to get franchise of any company.
What is Franchising?
Franchising means that a corporation (the franchisor) allows another person or business (the franchisee) to operate a company using its name, goods, and operating processes in exchange for transaction fees. The franchisor profits through increasing revenue and name recognition, while franchisees get the benefit of the franchisor's established reputation and systems.
How To Get Franchise of Any Company?
Contacting the Chosen Franchisor: The paperwork, capital liability, and business agreements vary from one franchisor to another. By communicating directly with the franchisor, you can know more about the franchisor's requirements because all information is not shared on the corporate site.
Preparing All the Requirements:This is an important stage. You must pay close attention to this phase because the franchisor's approval of your franchise application depends on the requirements you are asked to show. Most of the franchisors have established a set of specifications. However, a few of the most widely used documents are included below:
- You can get the entire franchise application on the website of the franchise company. If the application is unavailable online, you may contact the company about getting it.
- A letter of intent (LOI), which outlines your reasons for applying for the franchise.
- A map showing the proposed company location. Maps could be used for this, and you must have the images of the actual location.
- Your most recent profile or resume.
- A minimum of two valid official IDs.
- The lease contract or other documented agreement with the lessor needs to be submitted if you plan to rent the space for your business.
- Most recent bank statements.
- Identification Number of the Taxpayer.
Meeting your Franchisor:This is an important step. Meeting with the franchisor allows them to review your application and determine if it is ready for use. Franchisors would evaluate your suitability as a business partner.
Signing the Franchise Agreement: Finally, you are on your way into franchising if you have successfully completed all these steps. Pay attention to the details of the agreement and review it before signing it.You should focus on the important details listed below:
- The duration of the franchise, including the renewal period and other costs.
- Expenses and charges like royalties and franchise fees.
- Reasons why a franchise agreement could be terminated.
- The franchise package's exclusions and inclusions.
- List of suppliers and goods that have been approved by the franchisor.
Legal Provisions Involved in Getting Franchise of Any Company
As in India there is no specific legislation in connection to franchises, the industry is quite new and is affected with many national and sector-specific business regulations. On regulating the franchise, many laws, rules, and regulations play their role. The important legal provisions are:
- Indian Contract Act, 1872: This act deals with franchisor and franchisee agreements.
- Consumer Protection Act, 1986: This act provides resources to the consumer to seek redressal for defects in either goods or services. Any service provider or manufacturer may be held responsible for their actions.
- Competition Act, 2002: The competition law has changed from, in large part, preserving a monopoly and, hence, limiting competition to the promotion of valid competition since the economy of India has now become globalized. Some of its provisions are still in existence, but others relating to anti-competitive contracts, and the abuse of a dominant position are given effect.
- Trademarks Act, 1999: The registration of both trademarks and service marks is controlled and regulated under the trademark act.
- Monopolies & Restrictive Trade Practices Act, 1969:This Act put restrictions on product prices and supply sources. It needs to be checked that the provisions of the franchising agreement are neither restrictive nor monopolistic.Additionally, agreements that may contain restrictive trade practices must be registered under this Act. The ones that are pertinent to the franchising arrangement are limitations on methods, resale price-fixing requirements, exclusive supply clauses, and exclusivity in product dealing.
- Foreign Exchange Management Act, 1999: FEMA governs cross-border payments through foreign exchange. The franchise fee, royalties for system and trademark use, contributions towards advertising, or even training costs are usually governed under a franchising agreement. These payments may be sent to a foreign franchisor.
How to ApplyTo Get Franchise of Any Company?
Application Process:
- Getting the Application Ready: Compile the information and make sure you fulfil all franchisor requirements.
- Submitting the Necessary Paperwork: To show your skill and planning, this usually consists of your financial statements and a business plan.
- Getting Ready for the Franchisor Interview: Prepare to talk about your experience, why you want the franchise, and your goals for running and expanding your company.
Approval and Agreement:
- Understanding the Approval Process: Find out how the franchisor assesses applicants and what factors are most crucial.
- Negotiating Terms and Conditions: When negotiating terms and conditions, talk about things like territory, fees, and contractual duties. Make an effort to reach a good agreement mutually.
- Execution of the Franchise Agreement: The signing will take place when mutually agreed upon, and hence you are bound in a formal contract with the franchisor and start a new journey in franchising.
Conclusion
Getting a franchise is a relatively less risky and profit-creating alternative. Buying and managing a franchise will continue to pay dividends when a strategy is thought out and market research performed. However, it is advised to do proper market research, select the best company plan, get legal advice, read and understand the contract, disclosure document, etc.
The process of choosing the best franchise of a company is difficult. In India, this process must be followed after getting a franchise. Following this strict approach, the franchise would have an opportunity of turning profit and lowering the chance of failure.
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